Investors and all-cash deals increasing

Investors continue to steer Southwest Florida's housing recovery with all-cash deals, which in many cases are squeezing traditional owner-occupiers out of the market, a new study shows.

Many of those purchases stem from institutional investors, who are gobbling up foreclosures and short sales at a ferocious pace for use as rentals -- a phenomenon that first began elevating the market almost a year ago.

That investor thirst, coupled with tight lending restrictions, have made cash-centric real estate transactions more prevalent in Southwest Florida than perhaps at any time before, according to industry researcher RealtyTrac Inc.

"It's a bit of a paradigm shift in the market," said Daren Blomquist, vice president at RealtyTrac. "Cash represents a very large portion of current real estate sales, especially in many Florida markets, like Sarasota. I also think buyers are out there too, and many of them are willing to pay cash, if they're able to."

Buyers closed on 2,091 homes in Sarasota, Manatee and Charlotte counties in July, well outpacing numbers from a year ago.

Of those, buyers paid cash on 62 percent of the sales in Sarasota, 65 percent in Manatee and a whopping 74 percent in Charlotte -- all above the national average of 40 percent in July, according to figures released Wednesday by RealtyTrac.

Those gains were led largely by bulk-investment buyers, such as Wall Street's Blackstone Group and rival Colony Capital of California.

Those institutional investors accounted for 7 percent of all purchases in Sarasota last month, 11 percent in Charlotte and 20 percent in Manatee, which had one of the highest rates in the country. Atlanta topped the list, with 25 percent, while Tampa Bay had 22 percent.

RealtyTrac classified investor deals as sales to non-lending entities that purchased at least 10 properties in the last 12 months.

Baby boomers, too

The recent influx of cash also has been fanned by baby boomers, who have regained enough equity to sell houses up north to finance Sunshine State retirements, Blomquist said.

Bank-owned listings and short sales, which also tend to draw more cash offers than mortgage-backed buyers, both have risen steadily over the year, as well.

Some real estate consultants point out that this area always has carried a greater portion of cash buyers than most real estate markets, given the seasonality and dependence on retirees.

But with competition rising -- and supply dwindling -- it puts finance-dependant buyers at a growing disadvantage, said Robert Goldman, an agent with Michael Saunders & Co. in Venice.

"That's the spread we have been in for the past several years," Goldman said. "It makes it more difficult for first-time buyers and working folks to get a home, and it increases demand in the rental market."

The rising number of all-cash deals helped propel the median home price in the North Port-Sarasota-Bradenton metropolitan area to $205,000 last month, up 18.5 percent over the year, Multiple Listing Service records show.

Many industry analysts now fear those steady price hikes, along with rising mortgage rates and stringent borrowing requirements, have made home buying unaffordable for those who must rely on traditional bank financing.

That pinch has been especially dire among military veterans and first-time buyers, who often rely on low down-payment programs for their purchases, said Shannon Moore, broker and owner of Green Lion Realty in North Port.

Most sellers prefer cash deals because they typically close more quickly. Cash deals also eliminate issues ranging from appraisals to property inspections, which can stymie a lender-financed purchase.

Across the country, the cash transaction percentage for residential properties was up from 35 percent in June and up from 31 percent of all sales in July 2012, according to RealtyTrac.

"It's very competitive, and right now if you turn in an offer with financing, there will be three others with cash, so you're out," said Moore, who works with a lot of local investors. "The banks and sellers, unfortunately, will just say they don't want to jump through all of the hoops, so they'll go with the cash offer to close."